Australian car parts suppliers got it made

Local manufacturer knows how to handle the import threat from China, writes PHILIP HOPKINS.

30 August 2010Philip Hopkins

Hands-on: David Fraser on the factory floor. Picture: Andrew de la Rue

Toyota chief Katsuaki Watanabe burst into laughter when David Fraser told him the derivation of his company name, DAIR Industries.

"It's an amalgam of my name and my wife's - Irene," Mr Fraser said. "He thought it was a huge joke."

It's not unusual for Mr Fraser to be talking to automotive industry executives. In this case, he was at a global automotive suppliers convention in Tokyo.

His company, based in Dandenong South, is a leading parts supplier - parking brakes, pedals, car jacks, hinges and strikers, to name a few - to Holden, Toyota and Ford.

Its order book is full, defying the gloom surrounding Victoria's automotive parts manufacturing sector. Turnover is about $30 million, and Mr Fraser expects this to rise to at least $50 million within two years. Employment is about 200 - 120 in Melbourne and about 80 in Adelaide.

This outlook helps explain why DAIR has been nominated for membership of the Victorian Manufacturing Hall of Fame. The names of the successful inductees will be announced early next week.

DAIR's tale has an interesting twist; it's a case of reversing globalisation. DAIR was founded in 1963 as Reom Industries, a tooling designer and manufacturer that continued on its merry way until 1997 when US automotive group, the Detroit-based Dura Automotive Systems, pounced.

Mr Fraser, a commerce graduate and consultant, had become involved with Reom in the mid-'90s, and when Dura itself ran into a few problems, Mr Fraser took the plunge: he bought the Australian operations. The old Reom was back in Australian hands, and DAIR was born.

"Even though we parted company with Dura, we've set up an enduring technical partnership," Mr Fraser said. "We are still a relatively small business, but we can act like a large business. We've got a lot of resources at our disposal."

The tie-up has already borne fruit. DAIR won a contract to supply the instrument panel cross member to the VE Commodore project after tapping into Dura's German expertise.

DAIR has subsequently sent its own staff to Germany and the Czech Republic for training. "We have also exported technical products to Dura in South Africa, and we worked with Dura in the test phase for the Camry park brake," Mr Fraser said.

"We've got great personal ties with them. It's different from many arm's-length technical relationships."

Reom/DAIR has always produced quality products. "If you can't kick the footy, there's no point in playing," Mr Fraser said. However, the factories haven't always looked too good.

DAIR moved from Cheltenham five years ago to its new spick-and-span building in Dandenong South. Visitors have remarked it's the cleanest factory they have ever seen.

"Image can't replace performance, but image coupled with good performance can be a differentiation," Mr Fraser said. "Toyota people bring their customers here."

The car-parts industry is tough, but Mr Fraser said many in the components industry had a weakness: they have never worked in another industry. "They do not know a different business model," he said.

"We've been able to get quite a mix of backgrounds here."

Mr Fraser himself has a broad base of experience to draw from, having worked as a consultant in pharmaceuticals, the law and accountancy.

DAIR has developed a strategy to cope with the import threat from Asia, particularly China. "We saw 10 years ago what would happen, so decided to focus on what we call 'import unfriendly' products," Mr Fraser said.

These include parts that are more fragile and easily damaged in transport, to big, bulky beams that are prone to damage and not economic or easy to ship in containers.